Affiliated Manager's Group Continues to Weather Uncertainty

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In the wake of the recent worrisome Brexit vote, Affiliated Manager's Group, Inc.(NYSE: AMG) announced reasonably solid second-quarter 2016 results earlier this week. But shares are down a modest 4% since then, as the asset management company endures the uncertainty brought by volatile markets and macroeconomic turmoil. Now that the dust has settled, let's take a closer look at how Affiliated Manager's Group closed the first half of the year.

Affiliated Manager's Group: the raw numbers


Q2 2016 Actuals

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Q2 2015 Actuals

Year-Over-Year Growth


$554.1 million

$646.6 million


GAAP net income

$107.4 million

$128.7 million


GAAP earnings per share (diluted)




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    Data source: Affiliated Manager's Group, Inc.

    What happened with Affiliated Manager's Group this quarter?

    What management had to say

    Affiliated Manager's Group CEO Sean Healy lauded the results as "solid" in the face of elevated market volatility, particularly as demonstrated with its positive net client cash flows in the wake of "industrywide risk aversion" following the Brexit referendum.

    Healy elaborated:

    Inflows through our retail and high net worth channels were offset by lower institutional sales, including several delayed fundings from institutional clients. In an environment of rising dispersion and market dislocation, we believe that our Affiliates have substantial opportunities to generate alpha across the broad array of their differentiated active equity and alternative strategies, and to build further on their long-term track records of investment outperformance. Looking ahead, as market conditions improve, we see meaningfully enhanced prospects for organic growth in the second half of 2016 and beyond.

    Looking forward

    Nonetheless, Affiliated Manager's Group now anticipates economic earnings per share for the full year to be in the range of $12.30 to $13.30, marking a reduction from its previous guidance for 2016 economic earnings of $12.70 to $14.20.

    This assumes AMG's normal model convention of actual market performance through the day prior to its earnings report and 2% quarterly market growth in the fourth quarter. But unlike last quarter, when AMG also assumed share repurchases in the amount of 50% of expected economic net income, given the pacing of its 2016 new investments, this guidance does not assume incremental share repurchases for the remainder of 2016. To a lesser extent, according to Healy during the subsequent conference call, AMG has modestly reduced its expectation for performance fees for the year.

    Finally, AMG offered an early look at next year, with preliminary 2017 guidance for economic earnings per share in the range of $14 to $16, assuming the full-year impact of its 2016 new investments, its impending share issuance, and resumed share repurchases of 50% of annual economic net income.

    With the 2016 reduction in mind, it's no surprise to see shares of AMG also trading modestly lower following the report. But in the end, with all things considered -- and given the environment in which AMG finds itself operating right now -- I tend to agree this was indeed a "solid" performance as AMG positions itself to generate more meaningful earnings growth down the road.

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